U.K. Tax Rules for Big Firms Face EU Probe
- U.K. group financing exemption is latest EU state aid target
- EU says competition laws apply until U.K. quits the bloc
The offices of global financial institutions, including Citigroup Inc., State Street Corp., Barclays Plc, HSBC Holdings Plc, and the commercial office block No. 1 Canada Square, stand in the Canary Wharf business, financial and shopping district of London, U.K., on Tuesday, Nov 29, 2016. The Bank of England added a new, higher bar to its third round of public stress tests.
Photographer: Chris Ratcliffe/BloombergAs Brexit talks continue to founder, the European Union attacked a tax break designed to lure big companies to the U.K. in a clampdown that could trigger legal wrangling lasting long after the nation is scheduled to leave the EU.
The European Commission opened an in-depth probe into the U.K.’s group financing exemption which allows companies active in the country to pay little or no tax on financing income received from another foreign unit via an offshore subsidiary. EU competition laws “continue to apply in full” until the U.K. is no longer a member of the bloc, it said in an emailed statement.